China is set to launch a digital wallet app that can hold local yuan currency for buying goods and services.
The app, e-CNY was available through private links before, but it has now launched to the public. The currency is developed by the country’s Digital Currency Research Institute and is meant to replace Chinese coins and banknotes. New registrations are only allowed in specific cities that are participating in digital yuan trials.
e-CNY will compete directly against established digital wallet apps such as WeChat Pay and Alipay, both of which have billions of users. The government-based app will attempt to draw users by holding lotteries that give away digital yuan as rewards and prizes.
Digital yuan is unlike cryptocurrency in that it’s not based on Blockchain or a unique asset. Also, it’s not decentralized but offers a level of privacy. Chinese authorities can monitor the app to check for illegal transactions.